A strong end to fiscal 2018 for Coupa as the spend management firm turned in its first non-GAAP quarterly profit of $884,000, on revenues up 41% year-on-year to $53.8 million. Subscription revenues were 46.6 million, up 38% year-over-year and comprised 87% of total revenue.
There’s been a shift in the revenue mix, notes CEO Rob Bernshteyn:
From a financial perspective, just three short years ago, over 75% of our new subscription revenues came from our core procurement applications. But today, that figure is less than 50%, with more and more coming from expense management, invoice management, supplier information management, and a host of other key offerings.
Something that we're continuing to go deeper and deeper into [is] to address virtually any permutation of spend across three different spend approaches [procurement, expenses, invoicing]. Then [there is] a whole host of what we call power user applications, applications that wouldn't necessarily be used by everyone in the company, but used by certain individuals to help get more and more value out of that ongoing spend and [be] able to optimize that outgoing spend.
We continue to make strides in our spend analytics engine, our contract life cycle management, our contract collaboration capabilities, our supplier information management capabilities, our inventory management capabilities, and much more.
For Bernshteyn, there’s another metric that he points to:
One non-financial metric we monitor closely is the spend under management we are driving for our customers on the Coupa platform. We believe this to be a key metric because for these transactions, our data grows and platform gets smarter. And that benefits all our customers. In fiscal 2018, we increased lifetime cumulative spend under management from $365 billion to $680 billion and we expect to surpass $1 trillion this fiscal year.
Categories of what Bernshteyn calls “spend expansion” is another big deal:
You have customers who have done very, very well with us. They've addressed their goals for year one, two, three, but maybe in year four, five, and six they're tackling even harder-to-reach categories in highly distributed organizations where they simply weren't able to get at those categories before. Now through highly user-centric technology that is very intuitive, that has gotten very, very sticky across the organization, [that] empowers our buyer to get even more aspirational about the categories they can undertake.
New customers signing up to Coupa during Q4 included Qatar Airways, Farmer's Group, American Water Works Company, Jobvite, Canadian Imperial Bank of Commerce or CIBC, The Co-op group, National Grid, National Gallery of Singapore, Exabeam, American Zinc Recycling Corporation, Grupo Dasa, and San Mateo County Libraries.
Bernshteyn highlights a number of other newcomers:
Lululemon selected Coupa's source to pay expenses and several power applications based on Coupa's demonstrated commitment to success, cultural fit, and proven track record in the retail sector. Bass Pro Shops selected Coupa's source to pay based on our proven ability to drive value across organizations with many distributed lines of business. And Grupo Bimbo, the world's largest baking company based in Mexico City, selected Coupa's source to pay as the best fit to manage spend across its complex and diverse global operational infrastructure.
And then there are those customers who’ve gone on to a successful deployment:
Nasdaq is the leading provider of trading, clearing, exchange technology, listing, information, and public company services across six continents. Nasdaq went live in Q4 with a global deployment on Coupa's source to pay. Their primary objective with Coupa is to better control spend through pre-approvals and standardized purchasing activities.
DoorDash is a technology company that connects people with their best local businesses by facilitating door to door delivery and other services. DoorDash went live on Coupa procure to pay in a rapid deployment of just ten weeks. A good example of our platform's agility and our ability to partner with customers around assertive goals. DoorDash engaged Coupa to better manage their rapid growth and address visibility and control into spending.
Razer Inc. is the world's leading gaming lifestyle brand. The company is dual-headquartered in San Francisco and Singapore. Razer is a pioneer of e-sports and has built the largest gamer-focused ecosystem of hardware, software, and services. Razer implemented the Coupa Expenses solution for their offices in the U.S., China, Hong Kong, Taiwan, and Germany.
That sort of global footprint should expand in 2018 following December's acquisition of Swiss P2P (Procure-to-Pay) vendor Simeno, which brings increased ability to support complex global buying requirements as well as providing a stronger presence in Europe. Bernshteyn explains that there are two components behind this purchase:
One component is just the main expertise in what we call Advanced Catalog Management. This is really part of our overall vision to provide an open platform in our industry…The domain expertise in that area is very important to us.
And secondarily, they happen to have a local presence in German and Swiss markets where we've hired organically, but why not pick up the opportunity to have new folks join us who ascribe to our common set of values, who are already present in those markets, who have some very interesting interactions with customers and prospects in those markets? Together we can develop a business around that.
Coupa’s evolution continues at an encouraging pace. The quarterly profit is good to see as is the predicted reduction in full year losses for fiscal 2019. But what’s of particular interest is the seeming recognition by existing and potential customers of Coupa as a platform play. As Bernshteyn puts it:
When we were growing six years ago, five years ago, it was still a matter of, 'Do you have the features and functions of this sub-area or can you meet the requirements of this area?’. We're well past that. We've done dozens and dozens of releases, we've been tested by some of the largest companies in the world. Now of course, it's a never-ending story and you want to get better and better and better. but I think customers are really starting to see us as the business spend management platform that we're becoming.
More to come on this later this month when we'll be attending Coupa’s European Executive Symposium in London. Then in May we'll be reporting from the annual Coupa Inspire event in San Francisco.